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What’s Driving the Current Uptrend in US Steel Prices?

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Nov. 20 2020, Updated 5:19 p.m. ET

US steel prices

Spot steel prices in the US (DIA), especially in the flat-rolled segment, have risen over the last month. In this part of the series, we’ll explore what factors are driving the current upward momentum in spot steel prices. Then, we’ll explore how real these factors are to help us understand how sustainable the current momentum in steel prices is.

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What’s driving steel prices?

  • Trade actions: US steel companies including U.S. Steel (X), Nucor (NUE), and AK Steel (AKS) have had their share of victories in their battle against unfairly traded steel products. Preliminary duties have been imposed on three key steel product categories: hot rolled, cold rolled, and corrosion-resistant steel products.
  • Inventory restocking: Metal service centers like Reliance Steel & Aluminum (RS) were on an inventory destocking spree last year. Now, inventory levels have reached more appropriate levels that require restocking. With the import window partially closed for the existing supply lines, steel buyers are left with few options but to place orders with the domestic steel mills.
  • Strengthening raw material market: Raw material prices tend to impact steel pricing. While steel scrap prices have been strong since last November, iron ore prices also gained pace this month. With higher raw material prices, steel mills faced little resistance in raising their spot offers.
  • Stability in other industrial metals: Other industrial metals including copper and zinc have also recovered smartly from their January lows. Higher base metal prices help build momentum in steel prices also.
  • Rising Chinese steel prices: Chinese steel prices have recovered sharply over the last couple of weeks. As China is the largest steel producer and exporter, Chinese steel prices tend to impact pricing elsewhere also.

Can these factors take US steel prices even higher? We’ll explore this in detail in the coming parts of this series.

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